Flagstone receives £108m investment

Flagstone, the UK’s leading cash deposit platform, is being financed by Estancia Capital Partners, a US financial services specialist private equity firm with deep expertise in the cash management market, in a £108m ($138m) investment. Announced stock investment. Under the terms of the agreement, Estancia will acquire a minority stake in the Flagstone business.

Co-founded by Andrew Thatcher and Simon Merchant, Flagstone was founded in 2015 with one goal: to create a service-led fintech platform that helps UK savers get more out of their money. . Flagstone is currently the UK’s largest cash savings platform by number of banks and savings accounts on its panel. Individual savers, small and medium-sized enterprises (SMEs) and charities using Flagstone directly or through multiple fintech platforms, financial advisors and brand partnerships can access more than 200 common savings offers from 60 of the UK’s leading cash savings institutions. You will have the opportunity to access your savings account. We work with all providers, from large incumbent banks to challenger banks.

Serving a customer base of over 600,000 people, Flagstone’s total assets under management (AUA) now stand at over £11bn. The company’s AUA will increase in 2023 as more individual and business savers seek to maximize the interest earned on their cash and have the opportunity to benefit from the security of FSCS protection. has increased by more than £1 billion.

Flagstone posted a first-quarter profit in December 2022 and has maintained quarterly profitability acceleration since then. Flagstone’s resilient growth strategy is driven by management’s significant investment in forging partnerships and building strong, scalable operational capabilities, as well as the UK’s £1.7tn undisrupted savings market. Underpinned by providing seamless cash solutions. £1.1 trillion of these funds are held in accounts earning less than 2% per annum***, and in the first half of 2023, UK savers who switched their accounts to earn more interest will Only 23% of **** Flagstone’s customer has five accounts and he actively manages his savings by reinvesting seven times a year.

Simon Merchant, co-founder and CEO of Flagstone, commented: “We selected Estancia based on the strength of their team’s experience supporting ambitious companies that are transforming the shape of the U.S. money management market. Fundraising capacity is declining on a global scale. Today, Estancia’s investment and market expertise provides the firepower needed to really take advantage of the opportunities in front of you, whether through organic growth, partnerships, or acquisitions, helping companies further Accelerate integration. Our market leadership position.”

Takashi Moriuchi, co-founder and managing director of Estancia, commented: “We are delighted to be joining the UK savings market at a time when the opportunity to disrupt this status quo is huge and innovators like Flagstone must take the lead. We are excited to partner with the talented Flagstone team. Flagstone offers an easy-to-use platform, a superior suite of money management solutions across yield and maturity options, and an industry-leading level of service that our clients value. We have consistently demonstrated our ability to deliver on our customers’ ambitious growth goals.”

Darrin Jeffries, Estancia’s COO and Managing Director, and Keegan Mitchell, Vice President, added: “Our partnership with Flagstone is an overall win-win combination as it shares many similarities with two recent successful investments in the U.S. deposit market: R&T Deposit Solutions and PMA Financial Network. Since its founding in 2015. , Flagstone’s success has already been impressive. However, our in-depth industry research shows that the growth opportunity remains vast and Estancia has an excellent opportunity to accelerate its growth to even more exciting levels.”

Andrew Thatcher, co-founder and CEO of Flagstone International, commented: “As we reach this important milestone, we are delighted to be working with the investment team with the track record and international expertise that Estancia brings. It is clear that the market opportunity is important to our business on a global scale. , and we’re excited to leverage that to take our business to the next stage.”

Originally created as a platform for individual savers to access and maintain multiple cash savings accounts in one place, Flagstone now offers white label and API integration capabilities for businesses. , offering customers easy-to-use, adaptable, and competitive savings options. Flagstone works with many of the UK’s leading wealth management companies, including St James’s Place, offers a wide range of savings products with financial services providers such as Saga and Revolt, and already has a number of distribution relationships through its international subsidiaries. is being built. Outside the UK.

This transaction is a combination of primary and secondary investments. This primary investment will be used to further strengthen Flagstone’s position in the cash deposit market, increasing brand awareness, strengthening partnerships and matching competitive savings products with premium customer service. Secondary investments are used to reward Flagstone’s early backers, allowing them to realize significant returns on their investments.

Estancia’s Takashi Moriuchi and Keegan Mitchell will join Flagstone’s Board of Directors. Mr. Darin Jeffries will serve as an observer to the Board of Directors.

The transaction is expected to close in the second quarter of 2024, subject to required regulatory approvals.

Flagstone was advised on the transaction by Houlihan Lokey and CMS LLP. Estancia was advised by Jefferies LLC and Dechert LLP.